As Gas Prices Cast Cloud, Obama Calls for Scrutiny on Market

President Obama with Treasury Secretary Timothy F. Geithner and Attorney General Eric H. Holder Jr. on Tuesday.Credit
Doug Mills/The New York Times

WASHINGTON — With his re-election prospects influenced by the price of gasoline, President Obama on Tuesday demanded more “cops on the beat” to crack down on oil market manipulation, calling on Congress to bolster federal supervision of oil markets and to increase penalties for subverting markets.

In remarks in the Rose Garden, Mr. Obama, flanked by Attorney General Eric H. Holder Jr. and Treasury Secretary Timothy F. Geithner, chided Republicans who have been calling for increased American production to tamp down prices.

“There are politicians who say if we just drill more, gas prices will come down,” Mr. Obama said. “What they don’t say is that we have been drilling more.” He said no amount of drilling would solve the fundamental imbalance “that we use more than 20 percent of the world’s oil and we only have 2 percent of the world’s oil reserves.”

But it is doubtful that Mr. Obama’s proposal will go anywhere; it would increase spending on enforcement by about $52 million at the same time that Republicans in Congress are trying to rein in federal regulations. The president wants Congress to increase the surveillance and enforcement staff at the Commodity Futures Trading Commission.

The nationwide average for gas prices is hovering near $4 per gallon — not far from the $5 per gallon that Mr. Obama’s political advisers believe could cripple his re-election chances. Meanwhile, Mitt Romney, the presumptive Republican nominee, and other critics have tried to link the president to the prices at the pump.

Mr. Obama’s proposal would also allow the government to require that speculators in oil futures put up more of their own money.

“President Obama’s proposal will make it harder for Wall Street speculators to drive up oil prices,” said Daniel J. Weiss, director of climate strategy at the Center for American Progress, a research group with close ties to the Obama White House.

But the plan also drew Republican fire. Congressional Republicans have their own energy proposal, and many say they do not believe that market manipulation is the cause of the rise in gas prices. The House speaker, John A. Boehner of Ohio, is pushing for more domestic oil and natural gas exploration and for a freeze on regulations on refineries.

Senator Mitch McConnell of Kentucky, the Republican leader, issued a statement saying that “today’s proposal by the president probably polls pretty well, but I guarantee you it won’t do a thing to lower the price of gas at the pump.”

A year ago, Mr. Holder named a working group on oil and gas price fraud, telling it to “explore whether there is any evidence of manipulation of oil and gas prices” and to evaluate “the role of speculators and index traders.” The group held a handful of meetings but has not issued a report.

Tyson Slocum, director of the energy program at Public Citizen, who is also a member of the Commodity Futures Trading Commission’s energy advisory committee, called the president’s proposal “underwhelming.”

Mr. Obama, he said, “is calling on Congress to act right now, when he hasn’t exhausted his unilateral powers.” But he added that even if the federal authorities were to open investigations and issue subpoenas, as Public Citizen would like them to do, “at most it could lower prices by a buck a gallon — at most.”

John H. Cushman Jr. contributed reporting.

A version of this article appears in print on April 18, 2012, on page A19 of the New York edition with the headline: As Gas Prices Cast Cloud, Obama Calls for Scrutiny on Market. Order Reprints|Today's Paper|Subscribe